CFTC Chairman Timothy Massad broke his self-imposed silence last week, granting his first interview to Bloomberg TV. While he has been busy making high-profile hires, and the Agency has kept its no-action letter production line up to speed, the market has had little sign of any change in direction under the new helmsman. This rather amiable interview is unlikely to change that- excerpted highlights follow:
Different from Gary?- “Now our challenges are things like as we see how these new rules affect the marketplace, we’re going to need to fine-tune them in some respects. We’ve got a lot of work to do with respect to our international counterparts, our international regulators to make sure the global framework is harmonious…I think you’ve got a very pragmatic and practical CFTC”
What needs changing?- “Now we are in a phase where there will be fine-tuning…” Chairman Massad mentions utilities special entities, margin for uncleared swaps and easing the burden on end-users as areas to be finalised and\or adjusted.
Cross-border\deguarantee\London Loophole?- “No nation can regulate all the activity that occurs around the world. That’s why we need a harmonious global framework and that’s why we’re committed to building that. But we will also work with our counterparts in the banking regulatory agencies where we think that, look, there’s risk that maybe is beyond the reach of our authority but could affect the parent banking corporation. That may be something that they can address.”
Libor?- “we’ll work with the Fed on this issue of working with the industry, engaging with the industry to see if there are ways to develop alternatives that are less susceptible to manipulation, as well as again to reform the way LIBOR is set so that it is less susceptible to manipulation.”
CFTC budget? “I think we need to increase the budget… Fees are one possibility… I appreciate that these are tight times for all the government.”
Position Limits? “Congress has directed us to do position limits…we’re going to be very focused on what’s called bona fide hedging exemptions”
HFT?- “We’re looking into this…I’m also in dialogue with our counterparts at the SEC”
The promised shift in emphasis may be summed up by part of the response to a question about the CFTC’s budget “We’ve come out of an intensive rule-writing phase. Now we’re going to be more focused on compliance and enforcement, fine-tuning the rules still to see that they work well.” Overall, and to be expected in a general interview- short on definition, long on equivocation. However, it seems clear that Gensler’s messianic approach has been replaced by a more measured, technocratic style.